Software developer contractor

[Bear]

this i do not understand. if a contract role takes u 400miles out, so does a perm role of the same job.

SOmeone said that contract is not good career wise? i disagree. it is fantastic for your career! why?

because you get to learn and gain more experience then a perm job doing the same old stuff for years not progressing.

Also, if u love programming, u really do not want to move up the career chain becoming a PM or something as many developers do not like writing documentations and reading emails every day.

Contract roles aren't always close to home and if you want to contract, then you go where the work is or you hold out for the right role, but you need the war chest to sit it out until you find the right thing.

Permie roles are easier to find closer to home, if there was a decent contract near home I would take it. No permie role would pay you anywhere near the salary to make it worth travelling 400 miles but contracting does.

You may be lucky to find a contract that you learn new skills, but firms that hire contractors want people for a very specific set of tasks and they want people that hit the road running. They don't want to pay you the sort of hourly rate and have to teach you new skills. They want you for your particular skill set and as such there isn't a ladder you can climb. If you aren't interested in climbing any career ladder in a firm then great for you but some people do and so should understand that the money in contracting isn't the only story.

 

[jonneymendoza]

You asked for tips, so I'm giving you tips.

*shrugs*

Cheap critical illness cover is worth thinking about, as is setting up some form of pension to assist with tax efficiency. Putting aside a defined budget for training and planning your skill-set is important too. None of these were mentioned by you, so I thought I'd mention them.



On another point - if anything, having children, etc. contracting makes MORE sense - as you are contracted to work certain hours - unlike most permanent roles, where you are supposed (contractually) to be flexible with your working hours.

I certainly work longer hours than the contract developers.

no need to shurg man i appreciate yours and everyones comments Yes i will factor in such things and the pension stuff i will take a look at. i can always set that up any time right? its not something i need to setup from the get go so i can concentrate for now just creating my Ltd and finding a decent accountant thats close by

 

[Bear]

On another point - if anything, having children, etc. contracting makes MORE sense - as you are contracted to work certain hours - unlike most permanent roles, where you are supposed (contractually) to be flexible with your working hours.

I certainly work longer hours than the contract developers.

As I said, it depends if the contract takes you far away from home every week. If it is relatively local then of course it makes no difference. For my brother that lives in Milton Keynes but contract was in Belfast, he just couldn't handle it.

 

[jonneymendoza]

You may be lucky to find a contract that you learn new skills, but firms that hire contractors want people for a very specific set of tasks and they want people that hit the road running. They don't want to pay you the sort of hourly rate and have to teach you new skills. They want you for your particular skill set and as such there isn't a ladder you can climb. If you aren't interested in climbing any career ladder in a firm then great for you but some people do and so should understand that the money in contracting isn't the only story.

i must comment on this and say once again it depends on the industry and role.

for us software developers, even specifying on a certain skillset u can still learn more from a contract role.

basically for us software devs, contract roles are like this:

employers offer me a contract to develop a new project for them using the skillsets i know already.

They dont try and simply find someone that already has made a carbon copy of the same kind of application they want. they simply want someone who CAN make it.

developers are always learning new things during work especially on a new project. companies requirements are very dynamic and therefore there is always something new to learn.

people in the job i am in now have contractors who have told me how they have easily progressed and learn new stuff whilst being here. not because they dont know what they are doing but because the companies requirements and business needs are unique and developers learn new tricks to meet those requirements.

bottom line is, it depends on the industry.

 

[Bear]

i must comment on this and say once again it depends on the industry and role.

for us software developers, even specifying on a certain skillset u can still learn more from a contract role.

basically for us software devs, contract roles are like this:

employers offer me a contract to develop a new project for them using the skillsets i know already.

They dont try and simply find someone that already has made a carbon copy of the same kind of application they want. they simply want someone who CAN make it.

developers are always learning new things during work especially on a new project. companies requirements are very dynamic and therefore there is always something new to learn.

people in the job i am in now have contractors who have told me how they have easily progressed and learn new stuff whilst being here. not because they dont know what they are doing but because the companies requirements and business needs are unique and developers learn new tricks to meet those requirements.

bottom line is, it depends on the industry.

Of course and my experience is the same, I'm an engineer and my previous job was designing mobile comms equipment and my current contracting role is designing PCBs for airborne radar systems. I have learnt a lot in this role BUT my point is just because I have in this role, it doesn't mean I will in another role.

I know contractors where they are given the donkey work as the permies take all the interesting work. I'm not trying to convince you of anything but there are others who want to consider contracting and they should understand both sides of the story, not just the shiny hourly rate.

 

[Haircut]

**edit** ...and permanent software developers aren't able to learn new stuff? In my experience, the new/interesting development work is given to the permanent developers for first refusal, maybe with a single *new* contractor/consultant to assist for a short term, whilst the existing support and maintenance work is given to contractors/juniors to backfil. With the added bonus for the permanent developers that they get their training paid for by the company. Just because you're permanent doesn't mean you stagnate, nor does it mean you are stuck in the same role for years and years. Some do, of course, but that's their preference - there's always options...and I will always give the more interesting or cutting edge work to a permanent developer before a contractor.

In my experience it depends very much on the company.
Most of the stuff I've worked on since being a contractor has been the juicy new projects.
Lots of places like building up a project team made up mostly of contractors as a project, by definition, is a fixed length piece of work and it's easier to take on and get rid of contractors for a fixed period of time.
This is more true these days when lots of companies don't have the development resources in house to assign to a new project.

Obviously things like outsourcing affect things as well, but most companies want some on-shore developers for the client facing stuff.

Additionally lots of banks (where I generally work) seem to have hiring freezes for permanent staff at the moment any hires for new projects are mostly contractors at the moment. The last couple of permanent developers I know who have changed jobs have both gone to hedge funds as they seem to be about the only financial houses in the City taking on permanent staff these days!

 

[MuvverRussia]

Something I've considered for a while. Currently work as a senior dev for a company, specialising in Java / Java EE, Javascript and Python.

There's a few reasons why I haven't done it (yet):

1. Career. I'm pretty keen to move onwards and upwards, ideally moving to a more customer facing role. Hence it's not for me.
2. Travel for the contract. I know a few guys who travel a fair bit for their contracts, staying in pretty crap digs during the week (keep the cost down). Not sure I'd be happy with this too much.
3. Potential lack of travel with the job as a contractor. All the contractors I work with are stuck in the office most of the time. As a permie I tend to get the more interesting gigs and have spent significant (months+) time in the US, Spain, China and India with work,
4. Stress. Will you be renewed? Won't you be renewed? Not much fun if that happens at Christmas time or similar. Also get used to a short notice period.
5. IR35 minefield. That said, unless you're stupid (5 years in the same contract?) and do as much as possible (e.g. substitution clauses) to avoid it then this isn't too bad.
6. Training. I get a fair bit through work and this would have to come out of my own budget as a contractor.
7. I enjoy my holidays too much. I like to take a few weeks off each year to travel. This is bad enough when you're shelling out £2-3k on the holiday, without thinking - crap, each week off is costing me £2.5k

Good luck with it!

 

[kevy1986]

Hey guys,

Have been very interested in this post. I'm halfway through my third year applied computing, from a decent uni and would like to know what to aim for after my degree. I will have a degree in about 6 months but plan on doing final year for honours to get a full degree. I feel confident in many languages I have used but in no way professional. The further I go nothing seems daunting as it used too. Its all basically the same OOP with different syntax. The main problem I face is what to learn. There's far too much to specialise in. What did you all do after your degree ? I want to aim for as big as company I can get and learn all I can from them. K

 

[jonneymendoza]

Hey guys,

Have been very interested in this post. I'm halfway through my third year applied computing, from a decent uni and would like to know what to aim for after my degree. I will have a degree in about 6 months but plan on doing final year for honours to get a full degree. I feel confident in many languages I have used but in no way professional. The further I go nothing seems daunting as it used too. Its all basically the same OOP with different syntax. The main problem I face is what to learn. There's far too much to specialise in. What did you all do after your degree ? I want to aim for as big as company I can get and learn all I can from them. K

after my degree i went out to look for a job. took me half a year to find one but managed to do so.

 

[kevy1986]

after my degree i went out to look for a job. took me half a year to find one but managed to do so.

Well that rather dampens my spirit, I am already in an 18k year job, goventment, that I absolutely hate. I can still go back to as working part time and can change contract but have spent over 4 years learning software development. I just want a job doing something I really enjoy and am good at. I would take a job at lesser salary as long as I didn't hate it. That's what my last 4 years has been about.

 

[redeye_uk]

Why do you say this?
I have a couple of contractor friends using Crunch and they seem pretty happy with them.

Any reason why? It would probably be quite helpful.

Sorry for being blunt, but your friends don't know any different. Crunch and Pay Stream are scumbags.

They use propriaty software which is rubbish, never respond to correspondence and offer poor advice. I'd bet the 'personal accountant' isnt qualified in any way. Not to mention the hassle they give you when you decide you want to change accountants.

They aren't [chartered] accountants and probably have some pleb dealing with enquiries.

They are the Digital Agencies of accountants and de-value the service

I cant stress it enough. The golden rule is to have a good accountant and to use a web app such as Free Agent.

edit: not to mention their contact number is 0844

 

[Amleto]

Hey guys,
...
What did you all do after your degree ? I want to aim for as big as company I can get and learn all I can from them. K

A big company is no guarantee that they will help you more than a smaller company. They are generally more inflexible and can be more of a ball ache to work for.

after my degree i went out to look for a job. took me half a year to find one but managed to do so.

It took me 9 months of searching in 2006/7 and that was with a phd

 

[aln]

For all those saying it is tax avoidance - I pay way more tax being a contractor (corporation tax, VAT etc) than I ever would being a perm

I'm having my doubts thats true, otherwise whats the point?

You can go umbrella for around £15 a week. This'll mean they PAYE you and there'll be little effort on your part when it comes to managing a company and you'll still be able to claim certain expenses.

My understanding is you go limited in order to avoid tax, expense to the extreme, or if you're hiring your own employees. Otherwise, again, whats the point?

Edit: I'm serious by the way. I've started contracting recently and am under an umbrella. I'm considering going limited. I'd really like to know if it's not going to benefit me.

 

[Amleto]

You pay less tax as a % through ltd, but your (potential) salary is massively higher as well.

 

[aln]

You pay less tax as a % through ltd, but your (potential) salary is massively higher as well.

Thanks for the response. Is going ltd generally the accepted smartest way to be a contractor long term? Is paying an accountant generally considered a must?

 

[Bear]

I'm having my doubts thats true, otherwise whats the point?

You can go umbrella for around £15 a week. This'll mean they PAYE you and there'll be little effort on your part when it comes to managing a company and you'll still be able to claim certain expenses.

My understanding is you go limited in order to avoid tax, expense to the extreme, or if you're hiring your own employees. Otherwise, again, whats the point?

Edit: I'm serious by the way. I've started contracting recently and am under an umbrella. I'm considering going limited. I'd really like to know if it's not going to benefit me.

Expensing is no different from umbrella to ltd co. You expense legitimate expenses made wholly for business need end of. Expenses is not tax avoidance, you don't spend money to don't have to, to save 20% in tax, you would be better off if you didn't spend it in the first place!

Of course you pay more tax as a contractor than as a permie. The point is in your hourly rate. A permie won't be paid anything like the contractors hourly rate and infact it is sometimes a source of animosity towards contractors.

 

[aln]

Expensing is no different from umbrella to ltd co. You expense legitimate expenses made wholly for business need end of. Expenses is not tax avoidance, you don't spend money to don't have to, to save 20% in tax, you would be better off if you didn't spend it in the first place!

I never said it was tax avoidance, I just questioned whether there was a higher tax burden. You guys seems to be saying there is, but that doesn't make sense imo.

Of course you pay more tax as a contractor than as a permie. The point is in your hourly rate. A permie won't be paid anything like the contractors hourly rate and infact it is sometimes a source of animosity towards contractors.

Paying more tax because you get paid more isn't really the point. Its whether you'd be more tax vs the alternatives, one of which is acting as a full time employee under an umberlla and if running your own Ltd or going sold trader was more expensive than going umberlla, I'll ask again whats the point? More hassle for less money doesn't make sense.

 

[jonneymendoza]

U get taxed more if u are a perm. when you are a Ltd you can save up to 20% tax on say 100k GROSS which is 20k saving!

that is huge especially for contractors.

going ltd is the way to go if u want to become a contractor

 

[redeye_uk]

I'm having my doubts thats true, otherwise whats the point?

You can go umbrella for around £15 a week. This'll mean they PAYE you and there'll be little effort on your part when it comes to managing a company and you'll still be able to claim certain expenses.

My understanding is you go limited in order to avoid tax, expense to the extreme, or if you're hiring your own employees. Otherwise, again, whats the point?

Edit: I'm serious by the way. I've started contracting recently and am under an umbrella. I'm considering going limited. I'd really like to know if it's not going to benefit me.

As mentioned, it's all to do with percentages.

Before I started contracting I was a perm on 25k a year. Of that, lets say I'd pay 4-5k in tax.

Now if we look at life as a contractor. For the accounting year 2011/2012 my company turnover was about ~80k.

I then also made 2.5k for being on the flat rate VAT scheme (I charge my clients 20%, but only pay 14.5% (13.5% for the first year)

We then deduct expenses for accountancy fee's, computer equipment, travel etc). Much to my regret, I didnt expense much in this year. This totalled £1700.

We can then also deduct my salary, which was 8k.

This left my company with an operating profit of ~73k, less Corportaion tax of 14.5k. So my company profit was about 49k.

As the 100% shareholder of my company, I pay this profit out as a dividend... to me.

The above example doesnt show my VAT returns which I would pay every quarter. This would also have totalled about 12k.

So without taking any of my income tax into account, my company paid 26.5k in taxes during the accounting year of 2011/2012.

I then enjoyed ~55k after tax in my pocket. I guess the equivilant perm salary would be in the region of 80k?

Im on target to make sales in excess of 100k this year

 

[Amleto]

you just said your ltd company turnover was 80k, and that gave you an equivalent net to a permie on about 80k. Surely you're doing something wrong!?